Dicker: Keep Your Eyes on Commodities

NEW YORK (Real Money) -- Europe has dominated the financial news. No one needs to tell you that. But in the flurry of reports on election results, coalition governments and Spanish bond yields, the financial media has lost its grip on the commodity trade.

Be smart. Stop watching what everyone else is watching and keep your eyes on oil and copper -- and gold. They will be where the money is made over the next several years.

The continued rise of commodities as an asset class represents a sea change that increases in speed, one that I outlined in my book "Oil's Endless Bid," and it will yield some of the most powerful investment opportunities and deepest, most consistent trends for the next decade and beyond.

Of course what happens in Greece and Spain will matter over the short term, but the largest question we have to answer as investors is how to keep our money growing and ready for the next trend, wherever we may find it. Pouring cash into US 10-year Treasuries and German Bunds is so obviously not the answer, yet it is the trade that is getting virtually all of the press and interest.

Ignore it. It is a low-risk, but surely negative-reward idea; a chance to put dollars in a mattress, buy a crash helmet and sit shivering in a corner.

In commodities, we still have a diversifying asset that has been investable for so brief a moment so far, is yet in its infancy and will attract countless billions of dollars over the next decade no matter if the fundamentals of shrinking economies support that or not.

We see that in the horrific numbers from PMI reports in Europe, the US and China indicating 1-2% growth or lower, all while still seeing global crude oil hover at $100 a barrel and copper maintain price well above $3 a pound.

Money, money, money. It continues to pour in. People want stuff in times of economic distress and in times of economic expansion, in all times it seems nowadays, because the commodity trade is just getting started.

I've talked a lot about commodity index and ETF growth. How about the latest rise of absolute-return funds? These are the newest, most-broadly-defined target return funds that are attracting billions of scared dollars quarterly from institutional and retail investors. They target a return above whatever index they arbitrarily track (it could be a dividend or bond rate) and promise steady, if low returns to investors.

Such promises leave lots of room for unbounded investment strategies, almost all of which will involve derivatives on commodities and increasing investment in the space. This is what's growing in the financial world, folks, not mutual funds.

The smart guys see it. Listen to Jeremy Grantham and his thinly-veiled prediction of alternatives delivering returns for the next seven years. Listen to Jim Rogers or Mark Faber.

Or listen to no one and watch the money flow. It's telling you something. Something no one else has decided to watch right now. The commodity trade remains a place you must be.

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